Donald W Mustico works with clients to apply for and meet Medicaid eligibility requirements through the Elmira – Corning area of the southern tier and throughout Chemung County, Steuben County and Schuyler County, NY.
We can help you protect your hard-earned assets from having to be spent down in order to pay for long-term care. The methods used vary depending on whether you are married, single or widowed and whether the long-term care is at personal home or in a nursing home.
Crisis Medicaid Planning vs Non-Crisis Medicaid Planning
Medicaid planning also varies depending on whether your long-term care is eminent, if you’re already in a nursing home or if you require immediate home care, which is referred to by Elder Law attorneys as “Crisis Planning”.
If your long-term care is not eminent and you are planning for the future likelihood of needing long-term care, whether in home or a nursing home, this is referred to as “Non-Crisis Planning. Engaging in Long-Term Care planning well before it is needed is the best and most efficient way to plan and saves more of your assets that would otherwise be at risk if you procrastinate and end up with a “Crisis Plan.”
New York Medicaid Eligibility
The rules which apply to qualifying for Medicaid vary significantly from state to state. Unlike our Federal Tax Law which are same for every person in every state, the Medicaid Laws in New York are different from the Medicaid Laws in most other states. The Medicaid rules also vary depending on whether you are single or married and whether you’re applying for nursing home Medicaid (called “Chronic Care”) or Medicaid home care (called “Community Care”).
We do know one thing – New York Medicaid Rules are the most liberal of all of the states.
Basic Concepts Applicable to New York Medicaid Eligibility
Unlike Social Security, Medicare or Social Security Disability, Medicaid is not an “entitlement program”. You pay into the Social Security System through withholdings from your wages over the course of your working life. When you reach retirement age you are then “entitled” to receive you monthly Social Security check regardless of your wealth or income. You don’t have to meet any financial requirements to receive your monthly Social Security check or to have your medical bills paid by Medicare.
On the other hand, the Medicaid system is a program for persons who can’t afford the cost of long-term care. You pay nothing into the Medicaid system. Therefore, in order to receive Medicaid, you must meet very restrictive asset and income requirements.
The Steps We Take to Help Clients Qualify For Medicaid in New York:
- Assessing is the FMV of all the assets the Medicaid Applicant owns. We actually create of Personal Balance Sheet for our Medicaid Planning clients to calculate their Net Worth.
- Using the client’s balance sheet mentioned above, we drop this information into specialized Excel worksheet and other software to calculate the person’s eligibility for Medicaid. If found to be ineligible, we then calculate the amount of Excess Countable Assets which the client owns that makes them ineligible for Medicaid. Once we know this number, we can make it disappear using the allowable Medicaid Laws to reduce or eliminate this disqualifying amount.
- Next we deduct from the client’s balance sheet the Assets which are Exempt under the Medicaid Laws. These vary depending on whether the client is married or single. For a married person this would be the Home, a Car, IRAs or Qualified Pensions, along with a Community Spouse Resources Allowance between $74,820 and 128,740 (2020). For a single person, exempt assets are limited to a Resource Allowance of $15,750 (2020) and IRAs or Qualified Pensions.
- “Total Assets” less the “Exempt Assets” = (equals) “Countable Assets.” If a client has “Countable Assets” they must be “Spent Down” or converted to an Exempt Asset in order to qualify for Medicaid. For example, a married couple who rent and don’t own a home could purchase a Home with their “Countable Asset,” thus reducing the amount of “Countable Assets.”
- This is where our skills come into play. In order to get a client with “Countable Assets” qualified for Medicaid, we make these “Countable Assets” disappear. We have to make the client look “poor enough” to qualify. We advise the client on how to reduce or completely eliminate “Countable Assets” by either spending them down or converting them into an “Exempt Asset” for legitimate purposes, such as paying off credit card, a car loan, or mortgage debts on a married couple’s house, making home improvements or repairs, purchasing a burial account, and many more techniques.
- If all of the above have taken place and there still are “Excess Countable Assets” the “ball game is not over”. We can still eliminate excess assets using methods that vary depending on whether the client is married or single. These methods are very technical, but much can be done using Medicaid’s own laws that permit such assets to be protected. This is just like an accountant that can reduce your income tax payable on your tax return by applying allowable tax laws to help you pay the lowest legitimate tax for the year. We can save all or, at a minimum at least one-half of, a client’s Excess Countable Assets that the client would other have paid to the nursing home without our help.
Medicaid Planning Should be Done in Advance of Need
If you had a “crystal ball” and knew the exact date you were going to be admitted to a nursing home, then you could easily eliminate the Excess Countable Assets which would prevent you from qualifying for Medicaid.
Same thing with death. If you knew the date of your death you would know when and how much life insurance to buy. Advance Planning for Long-Term Care (LTC) and Medicaid Qualification are like buying insurance for the chance that you may need nursing home care. In fact, people will sometimes buy Long-Term Care Insurance as a substitute for advance LTC Planning. LTC policies can very expensive, though, and many people wait too long to buy an LTC Policy and then can’t get it when needed because they are then deemed uninsurable due to health problems. If they can get it, the premiums on the policy are rated and very expensive. If you do advance planning, you likely won’t even need a LTC Insurance Policy. By the time you go into a nursing home you will already have protected the assets that you are trying to insure.
Even if You’re Already in a Nursing Home and Paying Out of Pocket, You Can Still Save Half of Your Assets
Ove the years we have had a number of nursing home resident’s spouse or children come into our office because they have spent down all of their loved one’s assets to the nursing home and now want to apply for Medicaid.
We ask them, “Why did you wait so long to come in and see me?”
Their responses are all the same.
- “They” told me that since we had too many assets we had to self-pay until the assets were spent down and then we could apply for Medicaid.
- “They” said that had we wanted to protect our assets we should have done that 5 years ago and now it’s too late.
None of these persons can ever seem to identify who “They” are.
But this story is all too familiar and a tragic occurrence to us at Donald W Mustico Attorney at Law. The looks on our client’s face is chilling when we tell them they got bad advice and that they could still have all or at some of what was paid to the nursing home if only that had sought our help earlier.
There’s still hope if you have spent down tens of thousands of dollars on nursing home care that could have been saved. It’s never too late to do Medicaid Planning, even after a spouse or parent has entered a nursing home. Do not take the advice of the nursing home, a friend, a neighbor, or even a general practitioner that is not knowledgeable in Medicaid Law.
Tax Preparation and Planning for Medicaid
When you’re considering a Medicaid Plan there are always tax issues to be considered. This is especially true when your assets are being transferred to a Medicaid Asset Protection Trust. You may own “difficult to deal with assets” such as Annuities, both Traditional and Roth Individual Retirement Accounts (IRSs), Life Insurance or similar assets. These assets have income tax implications if liquidated or transferred to a spouse, child or Trust as part of your Medicaid Plan.
Don and his staff have the training and expertise to identify the “tax land mines” that lay in the path of any well-designed Medicaid Plan.
Post-Medicaid Planning Tax Preparation
If you have opted to use Irrevocable Medicaid Asset Protection Trusts or specialized Medicaid Asset Protection Wills (MAP Wills) which create a Testamentary Supplemental Needs Trust for your surviving spouse, we can keep constant tabs on your Medicaid Plan to ensure you stay on course. We can prepare your annual income tax return and the returns for any Trusts that were completed as part of your Plan.
Don learned many years ago when he was both a CPA and an attorney preparing Estate Plans that there were many overlapping assets that were not titled properly for the type of estate plan the client had in place.
Medicaid and Estate Planning does not work on a “Set It and Forget It” philosophy. An estate plan needs to be monitored at regular intervals for changes within your needs or with any applicable laws. The changes in laws usually occur after every election. Every time a new administration comes into office it typically passes new legislation to undo everything the prior administration tried to implement. This new legislation is what Don refers to as an “accounts and lawyers relieve act.” Anytime that tax laws or Medicaid and Estate Tax Laws change, whether good or bad, it means that your estate plan should be reviewed.
One Tax Client’s Nursing Home Experience
We once had a tax client for whom we were doing a tax return for her mother at the same time we were asked to prepare a Medicaid Application. Previously, this client had been using the cheapest tax preparer that she could find to prepare her mother’s return. I questioned why her mother’s nursing home expenses and medical expense were so high and, as it turned out, the mother had self-paid the nursing home more than $135,000 of her assets over the prior two years.
I asked the daughter why she hadn’t consulted with a lawyer about transferring some of her mother’s assets. As usual she was given bad advice by the nursing home that she could not transfer assets within 60 months of being admitted. This is a common misconception.
If we had been her mother’s attorney two years ago, we would have been able to save at minimum $75,000 of her mother’s assets and that her mother would have been on Medicaid a year ago. The $50 tax return that the daughter had prepared for her mother actually cost $75,000.
The Documents are only part of the Medicaid Plan
The Estate and Medicaid Planning we do is more than just your legal documents. The retitling of the way your assets are owned is just important. Not all of your assets pass through your Will or Trust that may be executed as part of your Plan. Often there are assets that need to be retitled in order for them to folded into the control of the documents. This includes such assets as Life Insurance, Annuities, assets which are titled as joint with a spouse or child, IRAs and pension accounts.
When preparing your income taxes, we will often notice old assets which may be a problem down the road or newly acquired assets that now need to be considered. These are the things that a mere tax preparer or accountant who has no knowledge of Estate or Medicaid Planning would be able to identify. We call this process of your asset review “Funding and Retitling” (F&T). F&T is a constant process and is an ongoing element of your Estate Plan. Estate Plans that go without review will often have problems because they will be outdated with changes in law or your family or financial circumstances. This can lead to the loss of half your assets down the road.
New York Long-Term Care Planning and Medicaid Planning Attorney in the Elmira – Corning Area and throughout Chemung County, Steuben County and Schuyler County, NY.
Donald W Mustico can help protect your assets, apply for Medicaid, pay for long-term care and reduce your taxes in the Elmira – Corning area of the southern tier and throughout Chemung County, Steuben County and Schuyler County, NY.